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FORECLOSURE
is the legal means that your lender can use to repossess (take) your
home. When this happens, you must move out of your house or be evicted. If your
property is worth less than the total amount you owe on your mortgage
loan, your lender could seek a deficiency judgment. If that happens, you
not only lose your home, you also would owe your lender an additional
debt - the difference in what you owe vs the amount the home was sold
for.
Foreclosure
or a deficiency judgment could seriously affect your ability to qualify
for credit in the future. So you should avoid it if all
possible!
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Search
for Foreclosure Information on RentLaw.com |
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In
the Event of a FORECLOSURE NOTICE |
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Do
not ignore the letters from your lender. If you are having
problems making your payments, contact your lender
immediately. Explain your situation. Be prepared to provide
them with financial information, such as your monthly income
and expenses. Without this information, they may not be able
to help.
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Stay
in your home for now. You may not qualify for assistance if
you abandon your property.
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Contact
a HUD-approved housing counseling agency. They have
information on services and programs that could help you. The
housing counseling agency may also offer credit counseling.
These services are usually free of charge.
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If
you bought your home with a Veterans Administration (VA)
guaranteed loan, call the VA office nearest you and see
VETERAN'S
CENTER GUIDE
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FORECLOSURE
ALTERNATIVES |
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Special
forbearance. Your lender may be able to arrange a repayment
plan based on your financial situation. Your lender may even
provide for a temporary reduction or suspension of your payments.
You may qualify for this if you have recently lost your job or
your source of income or if you had an unexpected increase in
living expenses. You must furnish information to your lender to
show that you would be able to meet the requirements of the new
payment plan. |
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Mortgage
Modification You may be able to refinance
the debt and/or extend the term of your
mortgage
loan. This may help you catch up by reducing the monthly
payments to a more affordable level. You may qualify if
you have recovered from a financial problem but your net
income is less than it was before the default (your
failure to pay). |
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Partial claim.
Your lender may be able to work with you to obtain an
interest-free loan from HUD to bring your mortgage current.
You may qualify if:
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your loan is at
least 4 months delinquent but no more than 12 months
delinquent;
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your mortgage is not
in foreclosure; and
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you are able to
begin making full mortgage payments.
When your lender files a Partial
claim, HUD will pay your lender the amount necessary to bring your
mortgage current. You must execute a promissory note, and a Lien
will be placed on your property until the promissory note is paid
in full. The promissory note is interest-free and will be due if
you sell or leave your property, or when your mortgage matures.
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Pre-foreclosure sale.
This may allow you to sell your property and pay off your mortgage
loan to avoid foreclosure and damage to your credit rating.
You may qualify if:
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the "as
is" appraised value is at least 70% of the amount you owe
and the sales price is 95% of the appraised value;
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the loan is at least
2 months delinquent prior to the pre- foreclosure sale closing
date; and
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you are able to sell
your house within 3 to 5 months (depending on what your lender
agrees to).
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An additional
benefit to this option is the assistance you will receive with
the Seller-paid closing costs. *Typical
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Deed-in-lieu
of foreclosure. The final option you may be able to
voluntarily "give back" your property to the lender.
This won't save your house, but it will help your chances of
getting another mortgage loan in the future. |
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QUALIFYING: A housing counseling
agency can help you determine which, if any, of these options may
meet your needs. You should also discuss the situation with your
lender.
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